One of the benefits of organizing your business as a sole proprietorship is the lack of some of the formalities that other types of entities have to observe. The steps needed to relocate depend upon how the states involved treat independent workers and the kind of business you conduct. If you run a home-based consulting business using your own name, for example, the formalities are few. If you operate a mobile food kitchen under an assumed business name, there are additional steps required to move the business from one state to another.

1. Inform clients, customers and vendors about the relocation. A good rule of thumb is to provide 90 days' notice of a significant change in business operations. This allows time for suppliers that you rely upon to adjust their records to prevent delivery interruptions and clients or customers to get used to the idea. Thank customers, clients and vendors with whom you will not be continuing a relationship. You may need references or reviews from these old relationships in the future.

2. Wrap up all state and local obligations and register for these obligations in the new state. Pay any outstanding state and local taxes, such as sales or employment taxes. Close the business's tax accounts. Cancel any state or local licenses or permits in your name or the name of the business, such as professional licenses or food seller permits. In the new state, obtain licenses and permits needed, and register with the state tax authority.

3. Transfer your assumed business name, also known as a "doing business as" or DBA, if you have one. Assumed business names must be registered with the county clerk's office where the business operates. Submit a withdrawal of assumed name in your current state and submit an application to use the name in your new county. For example, Houston businesses would file an assumed name application or withdrawal certificate with the Harris County Clerk's Office.

4. Change your business bank account. Close your old account and transfer your assets to an account at a bank in the new state, unless your bank operates nationally and has a branch that is convenient to your new location. Keep your old banking records for tax purposes.

5. Change the mailing address associated with your federal employer identification number (EIN), if you have one. Write a letter to the Internal Revenue Service (IRS), asking them to change the address on your business's tax account. Sign the letter. Send it to the same address listed in the instructions to Form SS-4 -- Application for an Employer's Identification Number. The IRS will return an acknowledgment letter to the new address, usually within four to six weeks.

6. Check to see if your destination requires sole proprietors to register with the state. Less than a handful of states require sole proprietors to obtain a general business license by registering with the same state agency that handles corporations. In this instance, you would not need to register an assumed name separately. Name reservation would be handled with the business registration. Check the website of the secretary of state, which is the department that handles registrations in most states.

7. Complete state tax returns for the part of the year the business operated in each state. Sole proprietors report business income on their personal tax returns. You will owe state taxes in each state for the portion of the year the business was operating there. Be prepared to file two state tax returns and one federal return at the end of the year.

About the Author

Terry Masters has been writing for law firms, corporations and nonprofit organizations since 1995. Her online articles specialize in legal, business and finance topics. Masters holds a Juris Doctor from Howard University and a Bachelor of Science in business administration with a minor in finance from the University of Southern California.